Question 1

If a tax is increased,

Accepted Answer

A)  consumers will pay a higher price. 
B)  consumers will lose consumer surplus. 
C)  producers will receive a lower price after taxes. 
D)  all of the above are true. 
A)  consumers will pay a higher price. 
B)  consumers will lose consumer surplus. 
C)  producers will receive a lower price after taxes. 
D)  all of the above are true.

Question 2

How does the deadweight loss occur in a deficiency payment program?

Accepted Answer

The deadweight loss occurs because the p

Question 3

Fred's demand schedule for movie DVDs is as follows: At $60,he would buy 1; at $50,he would buy two; at $30,he would buy 3; and at $20,he would buy 4.If the price of movie DVDs equals $40,the consumer surplus Fred receives from purchasing movie DVDs would be:

Accepted Answer

A)  $20. 
B)  $30. 
C)  $40. 
D)  $110. 
A)  $20. 
B)  $30. 
C)  $40. 
D)  $110.

Question 4

Consumer surplus increases whenever the price of a good increases due to a leftward shift of the supply curve.

Accepted Answer

A) True 
 B)False

Question 5

As a result of the imposition of a tax on a product:

Accepted Answer

A)  some consumer surplus is transferred from buyers to producers. 
B)  some producer surplus is transferred from sellers to consumers. 
C)  some consumer and producer surplus is transferred from buyers and sellers to the government. 
D)  there is no change in either consumer or producer surplus. 
A)  some consumer surplus is transferred from buyers to producers. 
B)  some producer surplus is transferred from sellers to consumers. 
C)  some consumer and producer surplus is transferred from buyers and sellers to the government. 
D)  there is no change in either consumer or producer surplus.

Question 6

Exhibit 7-4 The schedule below shows the prices that a consumer is willing to pay for pounds of shrimp:
  Refer to Exhibit 7-4.If the price of shrimp is $12 per pound,according to the schedule total consumer surplus equals:

Accepted Answer

A)  $8. 
B)  $12. 
C)  $14. 
D)  $36. 
A)  $8. 
B)  $12. 
C)  $14. 
D)  $36.

Question 7

Exhibit 7-7   Refer to Exhibit 7-7.When the price is P1,the consumer surplus is equal to the area:

Accepted Answer

A)  A 
B)  C 
C)  A + B 
D)  A + B + C 
A)  A 
B)  C 
C)  A + B 
D)  A + B + C

Question 8

Exhibit 7-7   Refer to Exhibit 7-7.When the price is P2,the consumer surplus is equal to area:

Accepted Answer

A)  A + B + C 
B)  A 
C)  A + B 
D)  C 
A)  A + B + C 
B)  A 
C)  A + B 
D)  C

Question 9

Exhibit 7-14
   Refer to Exhibit 7-14.Identify the areas of consumer and producer surplus when the market price equals $20.

Accepted Answer

Consumer surplus equ

Question 10

If Ming is willing to pay $75 to attend the Broadway production of The Lion King but actually pays $40,she receives a consumer surplus of $35.

Accepted Answer

A) True 
 B)False

Question 11

Other things equal,a price floor will reduce consumer surplus,but it will increase producer surplus if the government buys up any surplus at the price floor.

Accepted Answer

A) True 
 B)False

Question 12

How do taxes distort the incentives of buyers and sellers in a market?

Accepted Answer

A tax drives a "wedge" between the price

Question 13

Exhibit 7-2   Refer to Exhibit 7-2.What is the total amount of producer surplus assuming this market reaches equilibrium?

Accepted Answer

A)  $1.00 
B)  $2.00 
C)  $3.00 
D)  $6.00 
A)  $1.00 
B)  $2.00 
C)  $3.00 
D)  $6.00

Question 14

The difference between the amount a consumer is willing to pay and the amount they actually must pay for a good is called the:

Accepted Answer

A)  price elasticity of demand. 
B)  substitution effect. 
C)  consumer surplus. 
D)  income elasticity of demand. 
A)  price elasticity of demand. 
B)  substitution effect. 
C)  consumer surplus. 
D)  income elasticity of demand.

Question 15

Exhibit 7-13   Refer to Exhibit 7-13.With the deficiency payment program,producers will supply ____ output.

Accepted Answer

A)  Q1 
B)  Q2 
C)  zero 
D)  none of the above 
A)  Q1 
B)  Q2 
C)  zero 
D)  none of the above

Question 16

Exhibit 7-11   Refer to Exhibit 7-11.If area d is larger than area ____,the consumer is better off from the price ceiling.

Accepted Answer

A)  a 
B)  c + e 
C)  c 
D)  a + b + d 
A)  a 
B)  c + e 
C)  c 
D)  a + b + d

Question 17

Consumer surplus increases whenever the price of a good decreases due to a rightward shift of the supply curve.

Accepted Answer

A) True 
 B)False

Question 18

Could a price ceiling decrease consumer surplus?

Accepted Answer

Yes,a price ceiling could decrease consu

Question 19

Exhibit 7-11   Refer to Exhibit 7-11.The producer surplus after the price ceiling is area

Accepted Answer

A)  d + e 
B)  f 
C)  a 
D)  a + b + d + f 
A)  d + e 
B)  f 
C)  a 
D)  a + b + d + f

Question 20

Which of the following statements is always true?

Accepted Answer

A)  An increase in price will lead to an increase in producer surplus along a supply curve. 
B)  An increase in price will lead to an increase in consumer surplus along a demand curve.. 
C)  A price ceiling will lead to an increase in consumer surplus. 
D)  A price floor will lead to an increase in consumer surplus. 
A)  An increase in price will lead to an increase in producer surplus along a supply curve. 
B)  An increase in price will lead to an increase in consumer surplus along a demand curve.. 
C)  A price ceiling will lead to an increase in consumer surplus. 
D)  A price floor will lead to an increase in consumer surplus.

Exam 7: Market Efficiency and Welfare

If a tax is increased,

How does the deadweight loss occur in a deficiency payment program?

Fred's demand schedule for movie DVDs is as follows: At $60,he would buy 1; at $50,he would buy two; at $30,he would buy 3; and at $20,he would buy 4.If the price of movie DVDs equals $40,the consumer surplus Fred receives from purchasing movie DVDs would be:

Consumer surplus increases whenever the price of a good increases due to a leftward shift of the supply curve.

As a result of the imposition of a tax on a product:

Exhibit 7-4 The schedule below shows the prices that a consumer is willing to pay for pounds of shrimp: Refer to Exhibit 7-4.If the price of shrimp is $12 per pound,according to the schedule total consumer surplus equals:

Exhibit 7-7 Refer to Exhibit 7-7.When the price is P1,the consumer surplus is equal to the area:

Exhibit 7-7 Refer to Exhibit 7-7.When the price is P2,the consumer surplus is equal to area:

Exhibit 7-14 Refer to Exhibit 7-14.Identify the areas of consumer and producer surplus when the market price equals $20.

If Ming is willing to pay $75 to attend the Broadway production of The Lion King but actually pays $40,she receives a consumer surplus of $35.

Other things equal,a price floor will reduce consumer surplus,but it will increase producer surplus if the government buys up any surplus at the price floor.

How do taxes distort the incentives of buyers and sellers in a market?

Exhibit 7-2 Refer to Exhibit 7-2.What is the total amount of producer surplus assuming this market reaches equilibrium?

The difference between the amount a consumer is willing to pay and the amount they actually must pay for a good is called the:

Exhibit 7-13 Refer to Exhibit 7-13.With the deficiency payment program,producers will supply ____ output.

Exhibit 7-11 Refer to Exhibit 7-11.If area d is larger than area ____,the consumer is better off from the price ceiling.

Consumer surplus increases whenever the price of a good decreases due to a rightward shift of the supply curve.

Could a price ceiling decrease consumer surplus?

Exhibit 7-11 Refer to Exhibit 7-11.The producer surplus after the price ceiling is area

Which of the following statements is always true?

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

Filters

Exhibit 7-7 Refer to Exhibit 7-7.When the price is P₁,the consumer surplus is equal to the area:

Exhibit 7-7 Refer to Exhibit 7-7.When the price is P₂,the consumer surplus is equal to area: